February 25, 2004

Bird Flu Boost For US, Canada Pork Exports

U.S. and Canadian pork exports are expected to benefit in 2004 from the outbreak of the Avian poultry flu as consumers in Asia look to alternative meats, particularly pork, said Shawn Mills, Manager of Commodity and Risk Management for Maple Leaf Foods on Tuesday.
 
Speaking to delegates at the Grain World Conference in Winnipeg on Tuesday, Mills said the bird flu situation has really shaken the confidence of consumers in Asia - providing Canada and the U.S. an opportunity to increase pork shipments to that region.
 
But Canadian hog producers are expected to find it tough going in 2004 with packers and retailers likely to continue to keep a strong grip on margins, Mills said.
 
Returns for Canadian producers in 2003 were hurt somewhat by the rapid depreciation of the U.S. dollar, and it was unlikely this was going to change in 2004, Mills said.
 
He said Maple Leaf's Financial Group expected the Canadian dollar to trade in a 75- to 80-U.S. cent range during 2004.
 
"A US$55/cwt value appears to be the new average price packers, and producers are going to have to work with in 2004," Mills said.
 
Canadian feeder-pig shipments to the U.S. were seen continuing to rise in 2004. Mills said shipments so far in 2004 were 42% ahead of the year-ago pace, but this kind of rate was not likely to be maintained.
 
Manitoba was seen having the highest shipment pace of pigs (around 10 pounds) going to the U.S., Mills said. The reasons are seen as the high cost of feed in the province and vomitoxin problems.
 
Problems obtaining permits to build large hog barns in Alberta and Saskatchewan have also resulted in some of these operations being set up in Manitoba.
 
Feed supplies in general have become a concern for the North American industry, Mills said. He added that Maple Leaf Foods, along with some others, have decided to ban the use of meat and bone meal in feed supplies for hogs. "That request came mainly from our Japanese customers," he said.
 
Mills predicted the North American hog slaughter pace in 2004 to climb 3% above the 2003 level. U.S. pork exports were seen climbing 1.3% over the year- ago level while Canadian hog exports, primarily to the U.S., were seen increasing 10% in 2004.
 
Most of the increase in Canadian hogs was said to have already occurred, Mills said, and was tied to the strong U.S. demand for feeder pigs.